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Global firms prepare for ASEAN changes over Belt and Road Initiative: Report

Xinhua, May 24, 2016 Adjust font size:

Multinational companies are readying for the changing macro landscape in ASEAN brought about by the China-proposed "Belt and Road" initiative, a report showed.

Of the 144 multinational business leaders surveyed, about 53 percent suggested that the initiative will be of greater relevance to their businesses in ASEAN in the next three years, while around 70 percent of the companies had undertaken steps to improve their competitiveness, according to the report by international law firm Baker & McKenzie.

These preparations include investment in employee training, the sourcing of project development opportunities, as well as identifying joint venture partners, potential acquisitions and new representative offices, the report added.

"The Belt and Road initiative may still seem to be a distant goal for some, but the reality is that many businesses are already [getting] ready for the opportunities and challenges that may arise," said Bee Chun Boo, Partner at Baker & McKenzie in Beijing.

The ASEAN region is expected to benefit from infrastructure-related investment opportunities that will facilitate cross-border investment in the manufacturing and service sectors.

About 59 percent of the surveyed companies expected the initiative to lead to partnerships with Chinese companies, while around 50 percent believed it would increase mergers and acquisitions and investment in ASEAN.

The report revealed that the infrastructure and construction industries stand to gain the most from the initiative, followed by the manufacturing, e-commerce and logistic sectors.

From a geographic perspective, Indonesia stands to be the biggest beneficiary in ASEAN, with approximately 87.4 billion U.S. dollars of investment expected in pipeline infrastructure projects, roughly double the 42 billion dollars each that the Philippines and Vietnam will host.

"Competition for talent, especially those with Chinese language skills, is bound to increase, while competition among multinationals for joint venture partnerships or acquisition opportunities with Chinese companies will intensify," said Boo.

Chinese and Western companies are different in terms of culture, management models and operating styles as well as complex local and international laws, thus, it is important to engage legal or financial advisors to offer on-the-ground assistance at both ends of the deal and navigate some of the cultural and business nuances that often arise in cross-border transactions, she added.